Rolls-Royce cuts dividend for first time in 25 years

British engine maker Rolls-Royce on Friday cut its shareholder dividend for the first time in almost 25 years and said 2016 would be "challenging", but its shares nevertheless soared.

The firm, which makes engine systems for aircraft and sea vessels, announced in its annual results statement that it has reduced its full-year dividend to 16.37 pence in 2015, from 23.1 pence for 2014.

That was the first reduction in the group's shareholder dividend since 1992.

However, Rolls' share price rallied more than 16 percent as investors were relieved the dividend had not been scrapped, and also welcomed news of a healthy order book.

Roll-Royce has issued six profit warnings over the last two years as slumping oil prices have hit demand for vessels, and embarked upon a radical restructuring last year.

Net profit, or earnings after tax, rose 20 percent to £83 million ($120 million, 106 million euros) last year compared with 2014, the company said Friday.

Rolls added that its order book swelled by four percent to £76.4 billion last year.

"Despite steady market conditions for most of our businesses it will be a challenging year as we start to transition products and sustain investment in civil aerospace and tackle weak offshore markets in marine."